Oil prices fall as another hurricane set to hit Caribbean coast

by Harriet Bell September 10, 2017, 12:21

Brent crude LCOc1 increased 16 cents at $54.65 a barrel by 1145 GMT, after earlier hitting its highest level since April at $54.80.

"One good piece of news is that the WTI-Brent spread has blown out so much that means excess USA crude is going to be exported", said Tony Nunan, oil risk manager at Mitsubishi Corp in Tokyo.

Hurricane Harvey hit the U.S. Gulf coast two weeks ago, and crude prices initially slumped because nearly a quarter of the country´s huge refinery industry was knocked out by the storm, cutting demand for crude oil, refining´s lifeblood.

The U.S. Energy Information Administration report on oil inventories is due on Thursday at 11:00 a.m. EDT-a one-day delay due to the United States holiday.

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That US crude oil inventories would build in the wake of Hurricane Harvey was largely anticipated, with some saying as much as 40-60 million barrels could be added to inventory while shuttered refineries struggle to come back online.

US crude oil prices rose and gasoline prices fell at the start of the holiday-shortened week as the gradual restart of refineries in the Gulf of Mexico that were shut by Hurricane Harvey raised demand for crude and eased fears of a serious supply crunch.

All told, commercial petroleum inventories rose by 7 million barrels in the week ended September 1, the Energy Department said in its weekly report on Thursday.

U.S. Gulf Coast utilization rates dropped to 63.4 percent, the lowest rates since the EIA began collecting the data in 2010.

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Refineries forming 20% of the country's daily refining capacity are still closed, although the majority are in the process of resuming operations. Six Gulf Coast refineries, accounting for 9% of US refining capacity, remained closed as of Tuesday afternoon, according to the Energy Department. Production wasn't impacted, the company said it has enough supplies to meet the needs of its wholesale customers, "but we expect intermittent terminal supply outages and will continue working to locate alternate supplies of gasoline, diesel and other refined fuels as needed".

Natural gas for October, headed down 6.2 cents, or 2.1%, to $2.919 per million British thermal units.

"Hurricanes can have a lasting effect on refinery and industry demand", said Eugen Weinberg, head of commodities research at Commerzbank in Frankfurt.

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